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Commissioner of Income-tax Vs. Pearey Lal Radhey Raman - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 370 of 1977
Judge
Reported in[1979]117ITR319(All)
ActsIncome Tax Act, 1961 - Sections 271(1) and 274(2)
AppellantCommissioner of Income-tax
RespondentPearey Lal Radhey Raman
Appellant AdvocateAshok Gupta, Adv.
Respondent AdvocateK.B. Jendal, Adv.
Excerpt:
- .....under section 271(1)(c) of the i.t. act read with the explanation. he issued a notice because the concealed income was below rs. 20,000. after hearing the assessee, he passed an order on the 28th february, 1975, imposing a penalty in the sum of rs. 22,755 which was equal to the concealed amount of income.2. on appeal, the amount of penalty was reduced to rs. 20,000. the assessee went up to the tribunal. before the tribunal, it was argued that when penalty proceedings were drawn up, the ito had no jurisdiction in the matter because the leviable penalty exceeded rs. 1,000. only the iac had jurisdiction to initiate penalty proceedings. the tribunal accepted the submission and quashed the order of penalty.3. at the instance of the commissioner, the tribunal has referred for our opinion the.....
Judgment:

Satish Chandra, C.J.

1. For the assessment year 1970-71, the assessee filed its return on 27th June, 1970. The ITO added back a sum of Rs. 22,755. On appeal, the added back amount was reduced to Rs. 20,000. Since the returned income fell below 80% of the assessed income, the ITO drew penalty proceeding under Section 271(1)(c) of the I.T. Act read with the Explanation. He issued a notice because the concealed income was below Rs. 20,000. After hearing the assessee, he passed an order on the 28th February, 1975, imposing a penalty in the sum of Rs. 22,755 which was equal to the concealed amount of income.

2. On appeal, the amount of penalty was reduced to Rs. 20,000. The assessee went up to the Tribunal. Before the Tribunal, it was argued that when penalty proceedings were drawn up, the ITO had no jurisdiction in the matter because the leviable penalty exceeded Rs. 1,000. Only the IAC had jurisdiction to initiate penalty proceedings. The Tribunal accepted the submission and quashed the order of penalty.

3. At the instance of the Commissioner, the Tribunal has referred for our opinion the following questions of law :

'1. Whether the Tribunal was in law justified in holding that the provisions of Section 274(2) prevailing on the date of filing of the return, i.e., 27-6-1970, and not as they stood amended w.e.f. 1-4-1971 were applicable to the assessee's case ?

2. Whether the Tribunal was in law justified in setting aside the penalty order dated 28-2-1975 under Section 271(1)(c) passed by the Income-tax Officer ?'

4. The statement of the case does not mention the date when the notice,for initiating penalty proceedings was given by the ITO. He, however, passed the order of penalty on 28th February, 1975. The relevant provisions had been amended by the Amending Act No. 47 of 1970, with effect from 1st April, 1971. After the amendment, the position was that the ITO had jurisdiction to impose penalty in cases where the quantum of concealed income was below Rs. 25,000. The jurisdiction did not depend upon the quantum of leviable penalty; hence, when the ITO passed the penalty order on 28th February, 1975, he had jurisdiction because the concealed income was below Rs. 25,000. The IAC had jurisdiction to impose penalty only in cases where the concealed income exceeded Rs. 25,000. This view finds support from the decision in CIT v. Om Sons : [1979]116ITR215(All) . In that case, it was held that even though the proceedings before the IAC may have been valid when they were initiated, yet the amendment of Section 274(2) deprived him of his jurisdiction and he could not exercise that jurisdiction or pass orders subsequent to the amendment. The present is the reverse case. Here, the ITO did possess jurisdiction on the date when he passed the order on 28th February, 1975.

5. At the end of the Tribunal's order, we find observations that, in view of the decision on the legal aspect, they did not consider it necessary to go into the merits of the matter. Since the view on the legal aspect has been reversed, it will be open to the Tribunal to consider the case on merits.

6. We, therefore, answer the questions referred to us in the negative, in favour of the department and against the assessee. The Commissioner will be entitled to costs which are assessed at Rs. 200.


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